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There’s an inflection point for nearly every growing small business, when they reach the point at which it’s no longer possible to handle their information technology (IT) strategy on their own.
Daniel Kalai has built his own growing small business around that very inflection point.
Kalai’s company, Helix Systems, offers flexible IT support to small and medium-sized organizations, giving businesses high quality support that doesn’t require them to hire a full-time person or even start building their own internal information technology team. We recently chatted with Kalai about the early days of his business and how those formative years shaped the foundation and future plans of Helix Systems.
How did Helix Systems get its start?
In the early 2000s, I was studying computer science and programming. If you could do some basic HTML and coding, you could get paying customers, so that’s how I got my first clients. When I was done with school, I decided to see if my partner and I could actually build a company around what we were already doing.
What were some of the early challenges?
Eventually, we realized we needed office space, and a friend of mine found a posting on Craigslist for an office space barter situation at a venture-backed magazine startup. They were looking for a young technology company to come in and do their IT support in exchange for office space. That’s how we got our first major customer as Helix Systems, as well as our first office. The office itself was really amazing. It was a really posh building—a nice place to get our start, as opposed to working out of our bedrooms. We had a little 100-square-foot office that had enough room for two desks. We started servicing the customers we had and making cold calls to try and get new business.
How did you finance your business?
We were very lean; there was no big funding. It was really interesting watching the stark contrast between how small we were and how slowly we were growing and the company we were sharing our office with. They had tons of money thrown at them, they were constantly hiring, and there was so much action happening—and eventually they ended up folding.
Watching them grow so fast was exciting for us. It gave us some credibility and kept our skills sharp. But we didn’t have that kind of capital, so we were just taking it very slowly. Our first official hire was a friend of mine from school and we couldn’t even afford to bring him on full-time.
How did the shared office space experience shape your business?
I learned that really large companies are run very differently—the culture’s very different. We always knew that we didn’t necessarily need to hire a very large team to scale our business. We knew that large players weren’t delivering the same quality of service we were able to deliver, and that gave us an edge when we were pitching new clients. To this day, that’s a big part of our pitch—we’re not a 500-person tech shop where the work may vary depending on who’s assigned to the account. We envision the company becoming about a 35- to 40-man shop and staying that way.
What’s your perspective on growing slow and steady versus a quick ascent?
If you’re building a product, you have to do a lot of research and development to even come up with something to sell. Having money behind you helps. In the service industry, you get a few clients and grow from there, using the capital from your first project to fund your second. I feel like this is going to start becoming the norm, because people are getting burned by fast-growing startups. We’re definitely starting to see the market trend more toward fundamentals and companies that have actual cash flow and can sustain the employees that they’re hiring organically.
What have been some of your greatest challenges in growing the business?
The cliché is that hiring is the number one challenge and there’s a lot of truth to that. As a small tech company that doesn’t have deep pockets, it’s especially difficult because we’re still trying to hire the best talent.
Because we have so many ongoing client relationships, there are plenty of places to screw up. We could be doing great for six months, and then one incident puts a damper on the relationship going forward. I tell our team that we’re not really in the technology business, we’re in the customer service business. If you distill it down further, we’re in the expectation management business. Everything we do is centered on making sure that we set expectations correctly from the beginning and maintain those expectations.
How do you define success?
I think success is a moving target. Sometimes looking back from where we are today, I think, “Oh wow we’ve made a lot of progress.” Other times I just see all the progress that still needs to be made. I do think that the definition of success has really changed for me. When I was younger, the idea was just to make a living. And even though that’s still important, being able to grow our team and build a second family that I’m really proud of and that has each other’s backs is also really important and impressive.
What advice would you give to an entrepreneur who’s just starting out?
If you’re thinking about starting your own business, which is definitely not for everyone, know that it’s a big risk—the odds are generally stacked against you. You have to have thick skin and you have to be really tenacious. If someone tells you no, just keep going at it, and eventually someone else will tell you yes.
The other piece of advice I have is to find a problem that needs solving. Focus on one area and see what the problems are. You don’t have to necessarily invent something that hasn’t been done before, you just have to improve it.